Pinnacle West(US:PNW)2025-11-03 17:02Financial Data and Key Metrics Changes - The company reported earnings of $3.39 per share for Q3 2025, a modest increase of $0.02 year-over-year, primarily due to higher transmission revenues and robust sales growth across customer classes [10][11] - The updated 2025 EPS guidance was raised from a range of $4.40-$4.60 per share to $4.90-$5.10 per share, reflecting strong sales growth and increased transmission revenues [11][12] - Weather-normalized sales growth was reported at 5.4% for the quarter, with 6.6% growth in commercial and industrial (C&I) sales and 4.3% growth in residential sales [11][12] Business Line Data and Key Metrics Changes - The Palo Verde Generating Station operated at a 100% capacity factor throughout the summer, contributing to strong operational performance [5] - The company experienced a weather-normalized sales growth of 5.4%, with residential sales growth at 4.3% in Q3 2025 [5][11] Market Data and Key Metrics Changes - Arizona's population growth remains robust, driven by major employers expanding operations, which is a key factor in the demand for skilled labor [5] - Maricopa County was named the top county in the nation for economic development in 2025, highlighting the region's success in attracting high-growth industries [6] Company Strategy and Development Direction - The company is focused on long-term investments in transmission and baseload generation to secure a reliable grid and meet rising customer demand [7][8] - A new generation site near Gila Bend is planned, which could add up to 2,000 MW of natural gas generation to support existing and new customers [7] - The company is working on a subscription model to contract for phase two capacity, ensuring that growth pays for growth while maintaining affordability [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet rising customer demand and navigate a dynamic operating environment, emphasizing the importance of strategic investments [4][9] - The company anticipates continued robust customer and sales growth, with a forecasted long-term sales growth range raised from 4%-6% to 5%-7% through 2030 [14][16] Other Important Information - The company is actively engaged in a pending rate case, with a hearing expected in Q2 of the following year [8] - The capital plan through 2028 includes critical strategic investments in transmission and generation to support reliability and growth [14][15] Q&A Session Summary Question: Visibility on 2029 and 2030 gas build - Management confirmed that the pipeline is expected to be in service in 2029, with key milestones being monitored to ensure timely delivery [19][20] Question: Progress on the subscription model - Active dialogues are ongoing with counterparties for the 1.2 GW subscription opportunity, aligning with the timing of the Desert Sun project [23][24] Question: Clarification on equity dilution and needs - The company has substantially de-risked the equity need for 2026, with a focus on reducing regulatory lag and improving retained earnings [31][32] Question: Year-over-year change in sales growth as an EPS driver - The year-over-year variability in large load customers contributes to differences in EPS magnitude uplift from sales growth [62][63]